Why Tesco is being punished despite posting growth

Commenting on the group's performance, Steve Rowe, Marks & Spencer chief executive said, "M&S had a mixed quarter with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our Food like-for-like sales".

"We delivered an excellent operational performance across the group, with great availability, strong customer satisfaction scores and our lowest level of waste ever at Christmas", said Mike Coupe, CEO of Sainsbury's.

Tesco, the UK's biggest supermarket chain, reported like-for-like growth of 1.9% for its United Kingdom stores, a performance it said as thanks to the strength of its food business which saw underlying growth of 3.4%.

We've already had a first glimpse of that here on Monday where United Kingdom 2017 consumer spending fell for the first time in five years.

With M&S trading on a 2018 price/earnings (PE) ratio of 14.5 and dividend yield of 5.9%, they said the M&S valuation was still not compelling enough given near-term consumer spending uncertainty and poor earnings visibility. It insisted both divisions saw better trading in the key Christmas weeks.

House of Fraser said Black Friday was more successful for the chain, with sales over the promotional event in November up 0.8% in stores and within 1% of last year's record performance online. UBS analyst Daniel Ekstein said it appeared that sales volumes had found a sweet spot, although there were still concerns about the impact on margins.

Tesco shares tumbled 3.5 percent after Christmas trading results in its core United Kingdom business fell short of market expectations.

Market share growth in the Republic of Ireland was also at its highest in five years.

Its shares still tumbled more than 4pc as its trading in the quarter was hit by the collapse of wholesaler Palmer & Harvey which disrupted Tesco's tobacco supply lines.

Its figures were released at the same time as rival John Lewis, which reported a 3.1% rise in like-for-like sales for the six weeks to 30 December.

The FTSE is up 11 points this Thursday morning to fresh high's on the back of a weaker Pound, which is being held back despite yesterday's positive United Kingdom manufacturing data. The value of an investment may fall.

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